MIRA INFORM REPORT

Report Date :

25.11.2014

IDENTIFICATION DETAILS

Name :	ZIBO XINHUA-PERRIGO PHARMACEUTICAL CO., LTD.
Registered Office :	No. 13 Chemical Road, Zibo High-Tech Development Zone Shandong Province 255005 Pr
Country :	China
Financials (as on) :	31.12.2013
Date of Incorporation :	13.02.2003
Com. Reg. No.:	370300400005372
Legal Form :	Chinese-Foreign Equity Joint Venture Enterprise
Line of Business :	Manufacturing and Selling Ibuprofen Apis.
No. of Employees :	190

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	No complaints
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – June 1, 2014

Country Name	Previous Rating (31.03.2014)	Current Rating (01.06.2014)
China	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

CHINA - ECONOMIC OVERVIEW

Since the late 1970s China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role - in 2010 China became the world's largest exporter. Reforms began with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, growth of the private sector, development of stock markets and a modern banking system, and opening to foreign trade and investment. China has implemented reforms in a gradualist fashion. In recent years, China has renewed its support for state-owned enterprises in sectors considered important to "economic security," explicitly looking to foster globally competitive industries. After keeping its currency tightly linked to the US dollar for years, in July 2005 China moved to an exchange rate system that references a basket of currencies. From mid 2005 to late 2008 cumulative appreciation of the renminbi against the US dollar was more than 20%, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing allowed resumption of a gradual appreciation and expanded the daily trading band within which the RMB is permitted to fluctuate. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2013 stood as the second-largest economy in the world after the US, having surpassed Japan in 2001. The dollar values of China's agricultural and industrial output each exceed those of the US; China is second to the US in the value of services it produces. Still, per capita income is below the world average. The Chinese government faces numerous economic challenges, including: (a) reducing its high domestic savings rate and correspondingly low domestic consumption; (b) facilitating higher-wage job opportunities for the aspiring middle class, including rural migrants and increasing numbers of college graduates; (c) reducing corruption and other economic crimes; and (d) containing environmental damage and social strife related to the economy's rapid transformation. Economic development has progressed further in coastal provinces than in the interior, and by 2011 more than 250 million migrant workers and their dependents had relocated to urban areas to find work. One consequence of population control policy is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the North - is another long-term problem. China continues to lose arable land because of erosion and economic development. The Chinese government is seeking to add energy production capacity from sources other than coal and oil, focusing on nuclear and alternative energy development. Several factors are converging to slow China's growth, including debt overhang from its credit-fueled stimulus program, industrial overcapacity, inefficient allocation of capital by state-owned banks, and the slow recovery of China's trading partners. The government's 12th Five-Year Plan, adopted in March 2011 and reiterated at the Communist Party's "Third Plenum" meeting in November 2013, emphasizes continued economic reforms and the need to increase domestic consumption in order to make the economy less dependent in the future on fixed investments, exports, and heavy industry. However, China has made only marginal progress toward these rebalancing goals. The new government of President XI Jinping has signaled a greater willingness to undertake reforms that focus on China's long-term economic health, including giving the market a more decisive role in allocating resources.

Source : CIA

Company name and address

ZIBO XINHUA-PERRIGO PHARMACEUTICAL CO., LTD.

NO. 13 CHEMICAL ROAD, ZIBO HIGH-TECH DEVELOPMENT ZONE SHANDONG PROVINCE 255005 PR CHINA

TEL: 86 (0) 533-2195209

FAX: 86 (0) 533-2195206

EXECUTIVE SUMMARY

Date of Registration : FEBRUARY 13, 2003

REGISTRATION NO. : 370300400005372

LEGAL FORM : CHINESE-FOREIGN EQUITY JOINT VENTURE ENTERPRISE

CHIEF EXECUTIVE : ZHANG DAIMING (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : USD 6,000,000

staff :190

BUSINESS CATEGORY : MANUFACTURING & trading

Revenue : CNY 108,101,000 (AS OF DEC. 31, 2013)

EQUITIES : CNY 60,374,000 (AS OF DEC. 31, 2013)

WEBSITE : www.xh-perrigo.cn

E-MAIL : office@xh-perrigo.cn

PAYMENT : AVERAGE

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : stable

OPERATIONAL TREND : fairly STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.12 = USD 1

Adopted abbreviations (as follows)

SC - Subject Company (the company inquired by you)

N/A – Not available

CNY – China Yuan Ren Min Bi

OPERATIONAL TREND & GENERAL REPUTATION

This section aims at indicating the relative positions of SC in respect of its operational trend & general reputation

Operational Trend:- General Reputation:-

Upward Excellent

Steady Good

Fairly Steady Fairly Good

Ordinary Average

Fair Fair

Stagnant Detrimental

Downward Not known

Not known Not yet be determined

Not yet be determined

LEGAL STATUS & HISTORY

SC was established as a Chinese-foreign equity joint venture enterprise of PRC with State Administration of Industry & Commerce (SAIC) under registration No.: 370300400005372 on February 13, 2003.

SC’s Organization Code Certificate No.: 74656970-3

SC’s Tax No.: 370303746569703

SC’s Customs Registration No.: 3703332476

SC’s registered capital: usd 6,000,000

SC’s paid-in capital: usd 6,000,000 (CNY 49,662,600)

Registration Change Record:-

Date	Change of Contents	Before the change	After the change
2008	Shareholder (s) (% of Shareholding)	Shandong Xinhua Pharmaceutical Company Limited 50% Perrigo International, Inc. (U.S.A.) 50%	Shandong Xinhua Pharmaceutical Company Limited 50.1% Perrigo Asia Holding Company (Mauritius) 49.9%
--	Registration No.	001828	370300400005372
	Legal Representative	Guo Qin	Zhang Daiming

Current Co search indicates SC’s shareholders & chief executives are as follows:-

Name of Shareholder (s)	% of Shareholding
Shandong Xinhua Pharmaceutical Company Limited	50.1
Perrigo Asia Holding Company (Mauritius)	49.9

SC’s Chief Executives:-

Position	Name
Legal Representative and Chairman	Zhang Daiming
Vice Chairman	Ronald Craig Janish
General Manager	Liu Yongtai
Director	David Ray Johnson
	Wang Jianxin

RECENT DEVELOPMENT

No recent development was found during our checks at present.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

Shandong Xinhua Pharmaceutical Company Limited 50.1

Perrigo Asia Holding Company (Mauritius) 49.9

Shandong Xinhua Pharmaceutical Company Limited

=========================================

Shandong Xinhua Pharmaceutical Company Limited is in a leading position in the manufacturing technology and capacity for antipyretics and analgesics in China and is an important manufacturer in China for the drugs for central nervous system, steroids, cardio cerebrovascular system as well as finished dosage forms, pharmaceutical intermediates and pharmaceutical equipment.

Date of Registration: September 30, 1993

Registration No.: 370300400000376

Legal Form: Shares Limited Company

Chief Executive: Zhang Daiming

Registered Capital: CNY 457,312,800

Tel: 0086-533-2196803

Fax: 0086-533-2183499

Web: www.xhzy.com

Email: luoshizhong@xhzy.com

MANAGEMENT

Zhang Daiming, Legal Representative and Chairman

--------------------------------------------------------------------------------

Gender: M

Age: 52

Qualification: University

Working experience (s):

At present, working in SC as legal representative and chairman

Also working in Shandong Xinhua Pharmaceutical Company Limited, Shandong Xinhua Pharmaceutical Group Company Limited, Shandong Xinhua Pharmaceutical Import and Export Co., Ltd., and Xinhua (Zibo) Real Estate Co., Ltd. as legal representative

Ronald Craig Janish, Vice Chairman

-----------------------------------------------

Gender: M

Qualification: University

Working experience (s):

At present, working in SC as vice chairman

Liu Yongtai, General Manager

----------------------------------------------------

Gender: M

Age: 46

Qualification: University

Working experience (s):

At present, working in SC as general manager

Director

-----------

David Ray Johnson

Wang Jianxin

BUSINESS OPERATION

SC’s registered business scope includes manufacturing and selling ibuprofen APIs.

SC is mainly engaged in manufacturing and selling chemical APIs.

SC’s products mainly include: ibuprofen.

SC sources its materials 80% from domestic market, and 20% from overseas market, mainly India, U.S.A. and Samoa. SC sells 100% of its products to overseas market, mainly U.S.A.

The import & export status of SC in 2013 is as follows,

Country	Amount of Exports (USD)	Amount of Imports (USD)
U.S.A.	17,420,000	1,090,000
India	--	1,040,000

The buying terms of SC include Check, T/T, L/C and Credit of 30-60 days. The payment terms of SC include L/C and Credit of 30-60 days.

*Major Customer:

=============

Perrigo China Business Trust

Staff & Office:

--------------------------

SC is known to have approx. 190 staff at present.

SC owns an area as its operating office & factory of approx. 15,851 sq. meters at the heading address.

RELATED COMPANY

SC is not known to have any subsidiary at present.

PAYMENT

Overall payment appraisal:

( ) Excellent ( ) Good (X) Average ( ) Fair ( ) Poor ( ) Not yet be determined

The appraisal serves as a reference to reveal SC's payments habits and ability to pay. It is based on the 3 weighed factors: Trade payment experience (through current enquiry with SC's suppliers), our delinquent payment and our debt collection record concerning SC.

Trade payment experience: SC did not provide any name of trade/service suppliers and we have no other sources to conduct the enquiry at present.

Delinquent payment record: None in our database.

Debt collection record: No overdue amount owed by SC was placed to us for collection within the last 6 years.

BANKING

Basic Bank:

Industrial & Commercial Bank of China Zibo Zhangdian Sub-branch

AC#: 1603002109200131008

FINANCIALS

Balance Sheet

Unit: CNY’000	As of Dec. 31, 2011	As of Dec. 31, 2012	As of Dec. 31, 2013
Cash	18,278	14,219	9,839
Notes receivable	0	0	0
Accounts receivable	4,454	3,332	4,509
Advances to suppliers	723	1,229	1,653
Other receivable	828	357	0
Inventory	6,433	8,091	8,215
Non-current assets within one year	0	0	0
Other current assets	0	0	0
	------------------	------------------	------------------
Current assets	30,716	27,228	24,216
Fixed assets	28,076	34,436	31,654
Construction in progress	7,516	1,433	2,480
Intangible assets	4,648	4,464	4,282
Long-term prepaid expenses	0	0	0
Deferred income tax assets	0	0	0
Other non-current assets	0	0	0
	------------------	------------------	------------------
Total assets	70,956	67,561	62,632
	=============	=============	=============
Short-term loans	0	0	0
Notes payable	0	0	0
Accounts payable	3,124	2,903	2,414
Wages payable	17	0	0
Taxes payable	278	44	-684
Dividends payable	3,000	0	0
Advances from clients	0	0	0
Other payable	1,009	1,013	528
Other current liabilities	0	0	0
	------------------	------------------	------------------
Current liabilities	7,428	3,960	2,258
Non-current liabilities	0	0	0
	------------------	------------------	------------------
Total liabilities	7,428	3,960	2,258
Equities	63,528	63,601	60,374
	------------------	------------------	------------------
Total liabilities & equities	70,956	67,561	62,632
	=============	=============	=============

Income Statement

Unit: CNY’000	As of Dec. 31, 2011	As of Dec. 31, 2012	As of Dec. 31, 2013
Revenue	106,892	108,549	108,101
Cost of sales	96,972	97,892	99,546
Taxes and surcharges	623	739	729
Sales expense	423	504	503
Management expense	3,057	3,570	4,009
Finance expense	358	12	935
Profit before tax	5,384	5,771	2,376
Less: profit tax	674	699	603
Profits	4,710	5,072	1,773

Important Ratios

=============

	As of Dec. 31, 2011	As of Dec. 31, 2012	As of Dec. 31, 2013
*Current ratio	4.14	6.88	10.72
*Quick ratio	3.27	4.83	7.09
*Liabilities to assets	0.10	0.06	0.04
*Net profit margin (%)	4.41	4.67	1.64
*Return on total assets (%)	6.64	7.51	2.83
*Inventory / Revenue ×365	22 days	28 days	28 days
*Accounts receivable / Revenue ×365	16 days	12 days	16 days
*Revenue / Total assets	1.51	1.61	1.73
*Cost of sales / Revenue	0.91	0.90	0.92

FINANCIAL COMMENTS

PROFITABILITY: AVERAGE

The revenue of SC appears fairly good in its line.

SC’s net profit margin is average in three years.

SC’s return on total assets is average in 2013.

SC’s cost of sales is fairly high in 2013, comparing with its revenue.

LIQUIDITY: FAIRLY GOOD

The current ratio of SC is maintained in a fairly good level.

SC’s quick ratio is maintained in a fairly good level.

The inventory of SC is maintained in an average level.

The accounts receivable of SC is maintained in an average level.

SC has no short-term loans in three years.

SC’s revenue is in an average level, comparing with the size of its total assets.

LEVERAGE: AVERAGE

The debt ratio of SC is low.

The risk for SC to go bankrupt is average.

Overall financial condition of the SC: Stable.

CONCLUSIONS

SC is considered medium-sized in its line with stable financial conditions.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.61.78
UK Pound	1	Rs.96.78
Euro	1	Rs.76.59

INFORMATION DETAILS

Analysis Done by :	DIV
Report Prepared by :	SDA

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.